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Demand, Access & Useof Financial Services
FINSCOPE II 2009 FINDINGS•Prepared by: Synovate•Date: 5th October 2010
1© Synovate 2009 Steadman now Synovate
Contents•Introduction•Methodology•Demographics•Income•Financial literacy•Financial Landscape•Savings•Investment•Credit•Insurance•Money transfer•Access to finance by the Youth
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Introduction
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Background•FinScope studies provide data on access, demand and
usage of financial services and products
•The first FinScope study was carried out in 2006
•Since 2006, the financial sector has experienced changesand growth, notably;
- Increase in number of commercial banks- Mergers and buy offs- Innovations in financial products and services, increase
in number of branches- Upgrading of MDIs to commercial banks- Increased implementation of VSLA and SACCOs- More elaborate efforts by government in rolling out
Prosperity for All
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Background
•FinScope II (2009) is a follow up to FinScopeI conducted in 2006
•It provides details on the current status onaccess, demand and usage of financialservices
•Hence, providing information on changes andimpact created as a result of the interventionsin the financial sector
Methodology
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Methodology
•Approach: Face-to-face interviews with selectedrespondents aged 16 years and above at householdlevel
•Coverage: 56 districts•Sample selection
- Selection of EAs: Probability proportionate to size- Selection of Respondents; Kish Grid
•Achieved sample: 3001 (1649 female, 1352 male)
Distribution of the 16+
Central 940
Eastern 713
Northern 620
Western 728
UnderstandingUgandans
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Economicprofile &livelihood
• Majority of Ugandans live in the rural areas(75%)
• 63% have attained only primary education ornone at all
• 32% do not earn any cash income & only 8% areformally employed.
• For those with an income financial earning is frommainly agricultural activity (over 50%).
• Agricultural earning highest in the rural areas.30% of Urban people earn through runningpersonal businesses.
• 40 % earn irregularly
• Income from other activities constitutes 52%
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Access tofacilities
• Health centre are the closest facilities to thepublic –39% mentioning Less than a km & 42%1-5km
• Formal financial institutions are relatively far fromthe majority of the public–42% said they are 5 to10km or more
• 63%(less than a km) can easily access informalfinancial services
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FinancialLandscape
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Formallyincluded
Informallyserved
Financiallyexcluded
Individuals using “Formal” financial products supplied by institutionsgoverned by a legal precedent of anytype. Thus, a formal organization thatmust be bound by legally recognizedrules. Adults who currently use atleast one or more of these productsare included in this segment. This isnot exclusive usage, as theseindividuals may also be using“informal” products.
Individuals usingtraditional financialproducts supplied bycommercial banks, creditinstitutions & MDIs.
FormalotherBanked
Divided into two sub-segments for more accurate cross countrycomparisons:
Finscope financial strand segmentation methodology
Individuals using financialproducts supplied by non BoUregulated financial institutions
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Formallyincluded
Informallyserved
Financiallyexcluded
Individuals using “informal” products –i.e. productswithout recognized legalgovernance e.g. usingservices of an informal group,money lender, employer etc
Individuals who use nofinancial products - neither“formal” nor “informal” –tomanage their financial lives
Defining Financial Inclusion
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Financiallyexcluded
Defining Access strand–product usage•Banked: Individuals with a product from a bank (these individuals
could also have other products but their defining characteristic isthe fact they do have access to a bank product);
•Formal Others: individuals who do not have a product from abank but who do have products from another types of formalfinancial institutions (these individuals could also have informalsavings products but their defining characteristic is the fact theydo have access to a formal financial product although this is notfrom a commercial bank)
• Informal: individuals who do not have any formal financialproducts and only rely on informal products such as savings clubs;ASCA’sand burial societies etc
•Financially excluded: individuals who did not have access to anyfinancial product at the time of the FinScope survey.
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Financiallyexcluded
21%
20%
61%
28%
0% 20% 40% 60% 80%
Banked
Formal Others
Informal
Formal
Financial products usage
Overlap in the use of financial services
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Financial Access–mutually Exclusive
Base: All Ugandans 16years +
21% 7% 42% 30%
Banked Other Formal Informal Un-served
70% financially included
28% formally included
Financial inclusion is highly influenced by the informal sector
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Financial Access–mutually Exclusive
18%
22%
10%
7%
29%
43%
43%
28%
2006
2009
All Weighted population 18 years and above
Banked Other Formal Informal Un-served
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Financial Access (continued)
38%
15%
9%
7%
25%
47%
28%
31%
Urban
Rural
Access by Location
Banked Other Formal Informal Un-served
The informal sectorserving more rural thanurban
Only 15% of the people inthe rural areas areformally banked
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Main source of income
Agriculture isthe mainsource oflivelihood
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Formal access by employment
20%
11%
3%
19%
73%
33%
6%
7%
3%
10%
6%
8%
25%
57%
48%
39%
9%
32%
49%
25%
45%
32%
12%
27%
A household member (e.g. spouse, parent, child etc) pays my
Sell produce from own farm (food crops- beans, maize,cassav
Working on other people’s farms
Working for an individual in a private business
Employed in the formal sector like in an office–public or
Running own business
Banked Other formal Informal Un-served
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Formal access by Institution
18%
16%
3% 3%2%
1%
22%
17%
3% 3% 3% 2%
BOU regulatedInstitutions
Commercial Bank SACCO MDI MFI Credit Institution
2006 2009
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Barriers to using formal financial institutions
59%
44%
29%
23%
11%
10%
10%
9%
6%
6%
5%
3%
3%
2%
Don’t have money to save
Don’t have a regular income
I earn too little to open and maintain an account
I can’t afford to have an account
I can’t read or write
I don’t know how to open an account
I don’t need an account
The financial institution is too far from where I live or stay
Don’t want to pay service fees
I prefer to use other options rather than a bank
I couldn’t speak their language
I don’t qualify to open an account
Spouse/partner does not allow to open an account
It takes long to get money from the institution
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Banked Formal other
Informal
3% 2%
42%
4%
9%
5% 5%
Excluded30%
Overlap in the user of financial institutions
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Banked Formal other
Informal
5% 5%
25%
11%
15%
7% 5%
Excluded27%
Banked Formal other
Informal
2% 2%
47%
2%
7%4%
5%
Excluded31%
Urban Rural
Financial Access strand
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Savings &Investment
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Currently save67%
Ever saved butstopped
9%
Never saved24%
Incidence of saving - 2009
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Saving & Investment strand
73%
72%
15%
8%
12%
20%
2006
2009
Base: Weighted population 18 years and above
Currently save Ever saved but stopped Never saved
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Saving & investment strand
17% 4% 31% 19% 29%
Banked Other Formal Informal Secret place/Friends Don't save
Base: 16year and above
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Saving & investment strand
16%
18%
8%
4%
18%
32%
31%
18%
27%
28%
2006
2009
Base: Weighted population 18 years and above
Banked Other Formal Informal Secret place/Friends Don't save
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Saving strand by source of income
11%16%
8%3%
14%
70%
27%0%
5%
5%
3%
5%
4%
4%
15%
41%46%
24%
21%
8%
26%33%
14%14%
22%
36%
9%
22%
41%
24% 27%
49%
24%
10%
22%
A household member(e.g. spouse, parent,
child etc) pays myexpenses
Sell produce fromown farm (Cash crops–coffee, tea,pyreth
Sell produce fromown farm (food crops-beans, maize,cassav
Working on otherpeople’s farms
Working for anindividual in a private
business
Employed in theformal sector like inan office–public or
Running ownbusiness
Banked Other formal Informal Friends/Secret place Don't save
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What is happening in the savings space?
Read: In 2009, 70% of the 16+ Ugandan population claimed to be saving
Savings mechanisms/products
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71%
18% 16%
4%
26%
62%
7%
27%
6%
43%
Secret place Friends/relatives Banked Formal others Informally
2006 2009
Place of saving
Base: 18years and above
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Banked Formal other
Informal
3% 1%
31%
4%
6%
4% 3%
Excluded48%
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Banked Formal other
Informal
8% 1%
15%
9%
9%
5% 3%
Excluded50%
Banked Formal other
Informal
2% 1%
36%
2%
4%4%
3%
Excluded48%
Urban Rural
Savings strand
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Credit
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CurrentlyBorrowing
45%
EverBorrowed
20%
Neverborrowed
35%
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Borrowing status
34%
46%
17%
20%
49%
34%
2006
2009
CurrentlyBorrowing Ever Borrowed Never borrowed
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Credit strand 2009 (mutually exclusive)
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Borrowing strand (mutually exclusive)
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Borrowing by main income generating activity
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Agriculture & Credit
11%
8%
15%
4%
13%
Total Female Male Urban Rural
Incidence of borrowing for Agriculture
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27%20%
30%
0%
29%
23%28%
20%
43%
21%
7%0%
12%
0%
8%6%
12%
2%
7%
5%5%
5%5%
11%
4%
33% 35% 32%39%
33%
Total Female Male Urban Rural
Base: Weighted population 16 years and above who borrowed for agricultural purposes
Friends and family Commercial bank MDI SACCOS MFIs Others
Where agricultural borrowing is accessed
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35%
13%
11%
11%
10%
5%
Buy seed
Buy pesticide/herbicide
Hire of labor
Buy agricultural land
Buy fertilizers
Buy livestock
Use of Agriculture credit
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Banked Formal other
Informal
3% 1%
32%
2% 1%
Excluded61%
Borrowing Strand
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Banked Formal other
Informal
3% 1%
28%
0%
1%
2% 1%
Excluded64%
Banked Formal other
Informal
2% 0.5%
33%
0%
0.5%1.5%
0.5%
Excluded61%
Urban Rural
Borrowing Strand
Insurance
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FormalInsurance
3%
Informalinsurance
3%
Noinsurance
94%
2006Formal
Insurance -3%
Informalinsurance -
22%
Noinsurance -
75%
2009
Incidence of insuranceBase: 18+years
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(n=3001)
Insurance strand (include burial society & welfare fund)
Taking at least one form of insurance (23.4%)
Insurance Strand Uganda 2009
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1%
1%
2%
2%
4%
6%
18%
87%
Trading goods
Regulated provider like UgaMed …
Loan protection
Termlife
Motor Third Party Liability
NSSF
Member of welfare group
Member of burial group
Base:All those with insurance 16 years and above
Informal sectorplays an
important role ininsurance justlike in other
financial services
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Formal insurance by product
49%
30%
13%
12%
6%
5%
4%
3%
2%
Insures with NSSF
Motor Third Party Liability
Term life
Loan protection
Regulated provider like UgaMed/NIC/Jubilee
Trading goods
Unregulated provider like AAR, Bupa
House- Building or contents
Other occupational pension scheme
Most people buy formalinsurance as a mandate
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Benefits of insurance
54%
14%
13%
8%
6%
3%
1%
Guard against unlikely events or uncertainties
Prevent financial losses
Don't know
Look after my family
Prestige/Status symbol in society
To have a peace of mind
None
Benefits of insurance
Ugandans appreciate the importance of insurance despite lowusage
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Reason for not usinginsurance
Cant afford it
Don’t know about insurance and how it works
Never thought aboutinsurance
Don’t know how to go about insurance
Don’t want it
Don’t know where to buy insurance
Don’t believe in insurance
2006
56%
45%
14%
19%
9%
6%
4%
2009
55%
36%
25%
15%
11%
8%
6%
Cost & Knowledge of how to buy insurance are majorimpediments to use of formal insurance
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Lanscape of access
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Landscape of Access - Uganda 2009
33.4
70.8
45.2
23.4 0
20
40
60
80
100Transactions product
Savings products
Credit products
Insurance products
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Comparing Landscape of Access–Informal/formal
Money transfer &Remittances
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Incidence of Money Transfer
35% 34% 37%48%
31%
1% 1% 1%
0%
1%
64% 65% 62%51%
68%
Total Female Male Urban Rural
Base: All weighted population 16 years and above
Currently use Ever used but stopped Never
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Incidence of Money Transfer 2006
Within Uganda
Channels
Total Female Male Urban Rural
3,439,852
%
1,874,044
%
1,565,808
%
1,085,740
%
2,354,112
%
Informal services e.g. taxis 78 77 79 65 84
Commercial bank 25 21 29 35 20
Mobile money 13 12 14 21 9
Post office 3 2 5 4 3
Money transfer services (e.g western union, money
gram)2 3 1 5 1
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Incidence of Money Transfer 2006
Outside Uganda
Total Female Male Urban Rural
Weighted Base628,544
%
326,681
%
301,863
%
281,963
%
346,582
%
Informal 41 42 39 20 57
Money transfer outside Uganda 34 37 32 36 33
Commercial bank 17 15 20 24 12
Post office outside Uganda 5 4 6 5 5
Non-banking Institutions 3 5 2 3 4
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Frequency of receiving money
37%
18%17%
10%8%
6%
When needarises
At least once amonth
At least onceevery three
months
At least once ayear
At least onceevery sixmonths
Can’t remember
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Sources of Money
Total Urban Rural
Weighted Base641,048 279,367 361,681
Uganda88 79 93
Europe28 35 23
North America (USA or Canada)25 12 34
East Africa (i.e. Tanzania, Kenya including Rwanda & Burundi)14 11 17
Southern Sudan12 19 7
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